Tax deductions for primary producer deposits

Overview

The farm management deposits (FMD) scheme allows eligible primary producers to set aside pre-tax income from their primary production activities during years of high income. The income can then be drawn in future years as needed.

Primary producers can include FMDs as part of their risk-management strategy.

If you are a primary producer, under the scheme you can:

• make FMDs in financial years when your non-primary production income is not more than $100,000
• hold up to $800,000 in FMDs
• claim a tax deduction for primary production income deposited into an FMD in the income year you earned it, provided you do not withdraw the FMD in the first 12 months (otherwise it is taken to never have been an FMD, except in special circumstances)
• withdraw an FMD within 12 months, but only if the withdrawal is made:
  • following the receipt of Natural Disaster Relief and Recovery Arrangements primary producer Category C assistance
  • after 6 consecutive months of rainfall deficiency, demonstrated using the FMD rainfall analyser
• include the FMD in your taxable income in the income year you withdraw it.

Check if you can apply

To be eligible for the FMD scheme, you must be:

• carrying on a primary production business at the time you make a deposit
• an individual (either as a sole trader, a partner in a partnership or a beneficiary of a primary production trust) – companies and trusts are not eligible (Note: FMDs cannot be made by two or more people jointly, or made on behalf of two or more people)
• have taxable non-primary production income not exceeding $100,000 in the income year you make the deposit.